The shift to digital business is now at the "peak of inflated expectations," and CIOs and IT leaders should be preparing to enter the "trough of disillusionment" that invariably follows, Gartner Executive Vice President Peter Sondergaard said, opening the company's annual Symposium conference in Orlando this morning. He said we are now four years into the digital shift, and the push for "digital transformation" was following the typical Gartner hype cycle.

Comparing the changes that IT has been through in the recent past and will be for the foreseeable future to a roller coaster, he told the attendees that they will take the ride through this trough, and how they handle it will depend on how their organizations create "digital value at scale."

Sondergaard said that massive disruption occurs in any market once digital revenues hit 20 percent of the total, noting this has just happened in clothing, and will happen to other businesses as well. He said disruptors focus on different areas—including customer demand, supply chain, awareness/marketing, and distribution—and do two things: find new opportunities and attack the weaknesses of incumbents.

To counter this, he suggested organizations adopt "digital key performance indicators (KPIs)," which should be “built into the performance objectives of every leader in your organization." This can range from the number of platforms and ecosystems you connect with, to to manufacturing up-time, or to more experiential measures, such as customer satisfaction. In Gartner research, he said, 67 percent of business leaders say they should pick up the pace of digital transformation, and 77 percent of CEOs believe they must use technology to advance their business goals.

Sondergaard suggested there were three kinds of CIOs—IT partners (who focus more on transactional efficiencies), Digital Builders (who design and enable new products and services working in conjunction with the business), and Digital Pioneers (who act as internal entrepreneurs, leveraging technology to build the products that will later be important). But all should focus on delivering "digital value at scale," he said.

To make this work, he said, the biggest issue was focusing on talent, where he said AI, digital security, and Internet of Things (IoT) will be essential skills going forward. He noted that of 1.5 billion job candidates worldwide, there were 15 million IT job candidates, and 8.8 million experienced IT job candidates. But of these, he said, only 1,275 had experience in AI jobs. So he said, you should prioritize your investment in "AI capable leaders" and develop a multi-year talent strategy, including contracting, nurturing internal people, and capitalizing on external services.

He talked about three main "scale accelerators" for the future, including "digital dexterity," network effect technologies, and industrialized digital platforms. The network effect technologies that will be important include a focus on blockchain and digital ledger systems; and on mixed reality. But he said that in 2018, IT leaders need to focus most on the IoT, application programming interfaces, and most importantly, artificial intelligence and systems that learn.

Sondergaard said that Gartner predicts that starting in 2020, AI will eliminate 1.8 million jobs, but will be a net job creator, creating 2.3 million jobs. And most interesting to me, he said Gartner predicts that "in 2021, AI augmentation will create $2.9 trillion of business value and 6.2 billion hours of worker productivity." (I'm hoping to get more details on these predictions later in the week.)

Gartner Research VP Leigh McMullen and Gartner Fellow Tina Nunno (above) followed up on this by talking about technology, engagement, and diversity as the key skills needed to becoming scale accelerators.

"The secret to digital is analog," Nunno said, noting that it was most important to have the right people to manage a digital transformation. She noted that there has been a 60 percent growth in technology skills need for non-IT roles over the last four years (since 2014).

Nunno noted that AI scales people, and that while certain jobs have been lost in every technological revolution, others have been created. "AI will be no different," she said. But she added that its best use will be to augment human capabilities, saying that "AI is here to help us, not replace us."

McMullen noted that it was important to "deliver a consumerized experience" for enterprise workers, talking about how this was something smartphone designers have done well, but that hasn't been the case for most business applications. He said that by 2019, digital assistants will provide 10 percent additional productivity. (Again, I'm hoping to get more information on this.)

Of the three main accelerators, Nunno said, IoT can return value quickly, APIs take time to return value, and AI acts more like an S-curve over a long time, so it takes more patience.

The pair also discussed building an industrialized digital platform with McMullen telling the audience that we've had "enough with the digital dabbling" and urging them instead to focus on scale. But Nunno said that it was time to stop thinking of legacy applications as a "dirty word" and said by 2023, 90 percent of current applications will still be in use.

Related

As a result, they said integration will account for 60 percent of the time and cost of building a digital platform, and pushed the concept of a "hybrid integration platform" that includes new and legacy applications, and lets non-technical users do their own integration.

They then shared specific recommendations for what different kinds of IT leaders should do in building a digital platform. "You are never done building your digital platform," Nunno concluded.

To close, Sondergaard returned and told the audience that digital transformation is urgent, and encouraged those in attendance to use the roller coaster of digital business to help them drive business value.

About the Author

Michael J. Miller is Executive Vice President and Editorial Director of Ziff Davis Media Inc., where he takes an active role in corporate editorial issues, helps identify new editorial needs in the marketplace and shapes the editorial process of every Ziff Davis Media publication.
He joined the company in 1991 as Editor-in-Chief of PC Magazin... See Full Bio

Get Our Best Stories!

This newsletter may contain advertising, deals, or affiliate links. Subscribing to a newsletter indicates your consent to our Terms of Use and Privacy Policy. You may unsubscribe from the newsletters at any time.